CDW eyes geographic expansion after posting strong results

US reseller sees both sales and profit grow double digits

CDW is eyeing up acquisitions after reporting strong revenue and profit growth in its second quarter.

During the quarter ending 30 June 2019, the reseller giant saw sales climb 10.6 per cent to $4.6bn (£3.8bn), while net income rose 13.6 per cent to $196.6m.

On an earnings call transcribed by Seeking Alpha, CDW CEO Christine Leahy said that the US firm is considering acquisitions for three key reasons.

"We're still focused on M&A," she said.

"Our discipline around the right targets and then our methodical approach to integration and our focus on getting it right for the customer right off the bat, and empowering our co-workers to deliver for the joint customers, is leading and has led to really positive success. So the model is working.

"We are in the market. We're looking, constantly; we are proactive. We tend not to be reactive, as you know, but the way we think about it from a strategy perspective is straightforward. Two things, expand our solutions capabilities or extend our services capabilities. Those two things plus geo-expansion, that's essentially how we think about M&A."

CDW acquired UK-based Kelway in 2015, and market analyst Canalys last year predicted that the US firm would acquire a top 10 firm in Europe soon.

Leahy said that CDW would be cautious about making a move for a large firm.

"We have to look long and hard at that because of the difficulty of integrating an organisation," she said.

"We take that very seriously. That's why cultural fit leadership is so important, and we tick through the things that matter. So that's something we just have to look at, but we're really focusing on the capabilities and geographic reach always in the market. But it has to make sense."

Elsewhere, Leahy said that CDW is not seeing the market softness that some of its vendor partners are seeing, claiming that enterprise demand remains strong despite political uncertainty.

"In conversations with our customers, they are still feeling bullish and they are still looking to spend," she said.

"When you think about our customer base, and take a step back and think about some of the exposure that others have, that we don't have - things like China, things like consumer and certain other end markets. Hyperscaler is another example.

"We've got a broad portfolio, as you know, and we can help our customers, wherever their IT priorities are."